Tuesday, December 15, 2015

For
years, oil companies in the U.S. could count subterranean, untapped oil
reserves as assets in their financial statements, which lead to highly inflated
numbers. Now, with oil around $40 a barrel, the cost of pulling it out of the
earth is greater than the sale price (at least for fracking), so the SEC is
requiring companies to remove these fictitious assets from their books since
investors cannot gain any value from oil that won’t be touched. With billions
of barrels of oil disappearing off books overnight, already tense investors are
growing more fearful of a complete oil collapse. [more...]